Tuesday, April 18, 2006

Korean social-network juggernaut Cyworld has landed on American shores, with a new office in San Francisco. The social-networking service has reached saturation among young South Koreans, with reports estimating 90% of people in their late teens and early twenties as users according to Businessweek Online. A division of mobile wireless provider SK Communications, the company has already expanded into the Chinese and Japanese markets. How successful it will be in the US, especially against the MySpace?

While the American press is currently obsessed with MySpace, and media positing Cyworld as a potential competitor, the two products are very different in their approaches, though they’re striving for the same demographic users. While MySpace is relatively open to modification and third-party functionality, Cyworld is a walled garden. But Cyworld’s look and feel is very attractive, whereas MySpace pages are often eye-numbingly awful. And Cyworld is immensely profitable, reportedly earning over $12 million on revenue of $110 million.

Mini-homepages, or hompy,have long been a fact of life in Korea, and were often pointed out as hampering the growth of the Korean blogosphere. Like MySpace pages, they were often an eclectic mix of graphics, audio and text messages, with an array of online vendors selling hompy content for nominal fees. What Cyworld has done is integrate all the features of the traditional hompy into a nice package, complete with an internal economy and mobile access.

Cyworld promises to be anathema to hardcore geeks because of its rather blatant commercialism. Users are given a ‘room’ which they can then decorate with grahics of furniture, art, music and other personal touches. But these all come at a price in virtual shekels. The original Cyworld sees about $250,000 change hands in-network. The currency can be purchased via debit, credit, charged to a users mobile account or through prepaid gift cards (an ingenious system I’ve only seen in online porn here in the US). Users can also post their own public updates and photos for free.

Mashable points out that the US market demographics will probably skew even younger than MySpace, and because it’s a closed system and therefore more easily policed, the company may be better prepared to avoid negative stories about explicit content among other things. The look and feel I’ve seen are cute, with pixelated graphics and an isometric perspective like a cartoony version of The Sims Online.

The localized beta has gotten off to a rocky start, first going public but soon after shutting its doors. After contacting the San Francisco office, Red Herring could not get them to pin down a firm release date. While it probably won’t reach the saturation rate stateside that it has in South Korea (approximately 25% of the population, or 15 million users), with smart marketing it could definitely begin adding millions to their already impressive user base worldwide."